Two Russian systemically important lenders, PAO Promsvyazbank and PAO Credit Bank of Moscow, need to boost some of their capital ratios by the end of 2017 to comply with higher buffer requirements to be applied by the central bank as of 2018, Fitch Ratings said in its Russian Banks Datawatch report for the first nine months of 2017.
As of next year, Russian systemically important lenders will have to hold a common equity Tier 1 ratio of 7%, a Tier 1 ratio of 8.5% and a total ratio of 10.5%. The failure to meet buffer requirements will not constitute grounds for license cancellation but could limit the level of dividends offered by lenders, the rating agency noted.
At the end of September, the common equity Tier 1 ratio of Promsvyazbank and Credit Bank of Moscow stood at 6.5% and 6.9%, respectively. Credit Bank of Moscow's ratio already included an increase by around 120 basis points following the recently completed secondary public offering, Fitch said.
Credit Bank of Moscow's common Tier 1 ratio had risen to 8.5% as of Nov. 1 thanks to the inclusion of the lender's profit for the nine months of 2017 into capital, Vedomosti reported Nov. 27, citing the lender's representative.
Promsvyazbank's head and co-owner, Dmitry Ananiev, said earlier in November that the bank intends to bolster its ratios by selling distressed assets, as well as including its profit for the nine months of 2017 into capital, eyeing a common equity Tier 1 ratio of 7.2% by the end of 2017, Vedomosti noted.
In addition, out of 23 banks rated by Fitch, four smaller, nonsystemic lenders — namely JSCB Almazergienbank (JSC), PJSC Ural Bank for Reconstruction and Dev., PAO Moscow Industrial Bank and PJSC Asian-Pacific Bank — met the minimum capital requirements but not regulatory buffers, while PJSC Uraltransbank was in breach of both the buffer and Tier 1 capital ratio requirement.
Asian-Pacific Bank and Uraltransbank agreed plans to restore capital with the central bank, while their inability to implement the plans could result in regulatory intervention, the rating agency said.
